Postgraduate Student at Kyiv National Economic University named after Vadym Hetman
CURRENCY INTERVENTIONS OF THE NATIONAL BANK OF UKRAINE
Background.The devaluation of the Ukrainian hryvnia over the past three years has led to the introduction of a floating exchange rate and inflation targeting regime with the ability to intervene in the Ukrainian interbank foreign exchange market through currency interventions by the National Bank of Ukraine (NBU). The analysis of the effectiveness and consequences of currency interventions conducted by the NBU will allow the regulator to recommend methods for improving the state of the Ukrainian currency market and further development of financial markets and the economy of Ukraine.
The analysis of recent studies and publications has shown that despite the existence of some scientific developments, the constant changes in the economic environment, the fundamental factors and conditions of the functioning of foreign exchange markets require state regulatory bodies and scientists to continuously analyze the situation in order to identify and implement the most effective strategy aimed at stabilizing the national currency of Ukraine and promoting economic development of the country.
The aim of the article is to analyze the effectiveness of currency interventions of the National Bank of Ukraine in 2015-2017 as a fundamental factor affecting the actual dynamics of the exchange rates of the Ukrainian hryvnia and, consequently, on the Ukrainian economy, and, based on the analysis, propose to the National Bank of Ukraine ways to improve efficiency of the actions aimed at ensuring the stability of the Ukrainian hryvnia.
Materials and methods.In the process of research, methods of statistical and correlation, macroeconomic and fundamental analysis, and generalization were used.
Results.The currency interventions of the NBU for 2015-2017 are analyzed as an instrument for stabilizing the exchange rate of the Ukrainian hryvnia. The analysis of volumes and average rate of operations of the NBU on foreign currency purchase and sale in the interbank foreign exchange market of Ukraine is carried out. According to the results of this study, a package of proposals was developed, in particular: in order to smooth out seasonal fluctuations in the interbank foreign exchange market of Ukraine, it is necessary to consider the method of selling currency at the rate at which the currency was purchased (or at least with a margin of no more than 1 kopeck to cover organizational costs); in order to reduce the inflationary pressure on the national currency of Ukraine, the NBU may refuse to replenish international reserves through foreign exchange interventions; in order to develop the interbank foreign exchange market of Ukraine and its transition to self-balancing, the NBU should gradually reduce its own participation in the interbank foreign exchange market and activate market methods for smoothing short-term and seasonal imbalances in the structure of demand and supply of foreign currency; in order to timely inform the population and scientific circles about actions in the field of currency interventions, the NBU is recommended to elaborate and increase information and analytical publications on this subject, including statistics on foreign exchange interventions by requesting the best rate. The implementation of these proposals will contribute to stabilization of the national currency of Ukraine and economic development of the country.
Conclusion. For the first time the currency interventions of the National Bank of Ukraine for 2015-2017 were analyzed and conclusions were drawn regarding causal relationships between currency interventions of the NBU and the dynamics of the exchange rate of the Ukrainian hryvnia; a number of recommendations aimed at stabilization of the national currency of Ukraine, development of the Ukrainian interbank foreign exchange market and promotion of economic development of the country have been developed.
The presented conclusions and recommendations require further scientific research and discussion in the search for ways to eliminate seasonal imbalances in the structure of demand and supply on the Ukrainian interbank foreign exchange market, effective use of currency interventions by the National Bank of Ukraine, development of Ukrainian financial and, in particular, foreign exchange markets, which will contribute to the economic development of the country in the future.
Keywords:Ukrainian hryvnia, devaluation, National Bank of Ukraine, currency interventions, volume of foreign currency purchase and sale, average weighted foreign exchange purchase and sale rate.
FREE FULL TEXT (PDF)